based on some overall guidelines, and to that extent we would sup- 

 port that. 



Mr. COOLEY. Thank you, Mr. Chairman. 



Mr. Hansen, Thank you. The gentlewoman from Idaho, Mrs. 

 Chenoweth. 



Mrs. Chenoweth. Mr. Chairman and Mr. Duffus, I am really 

 pleased with what I am seeing proposed in 1527 for return on ski 

 operations. But I need to ask you a question because I don't under- 

 stand this particular section of the law. Formerly, the GRFS, you 

 reported in your testimony, did not ensure that the Forest Service 

 receives fair market value for the use of its land. And in what law 

 did we establish that they should receive fair market value rather 

 than a marginal return for their operations? 



Mr. Duffus. I believe it is the National Forest Ski Area Permit 

 Act of 1986 that requires the Forest Service to obtain fair market 

 value for the use of its lands for ski operations. 



Mrs. Chenoweth. Can you help me by explaining how you cal- 

 culate fair market value for the Forest Service lands? 



Mr. Duffus. I am not so sure I can do that, but I will offer some 

 suggestions. It is difficult, and I think the Forest Service recognizes 

 it is difficult to do. The Forest Service, as we reported in 1993, had 

 attempted through a contracted private appraiser, to analyze some 

 11 or so transactions where ski land was sold in order to get a bet- 

 ter feel as to what the value of ski area operations would be. 



I believe that effort was not concluded. I believe it was termi- 

 nated, and currently I don't know what they are doing. But when 

 you look at fair market value for ski operations, it is difficult to de- 

 termine because there are not a lot of comparables that exist. 

 There is a very small market of non-Federal lands carr5dng out ski 

 operations. 



So you have to look to other areas. Perhaps some other areas 

 would be the rents that are being paid for highly de^^eloped resort 

 areas such as golf courses or maybe oceanside resorts, although it 

 is not exactly the same type of situation. It is not a ski operation, 

 but it is a resort area. Perhaps another area to look at would be 

 the profitability norms for ski areas. 



That information probably is available through Dun & Brad- 

 street and some other financial referral document. So it is not an 

 easy thing to do, but we believe that what they are doing now and 

 how they are setting the rates does not reflect fair market value. 



Mrs. Chenoweth. I thank you because if we were to really ana- 

 lyze fair Forest Service activities because they are a government 

 organization, I mean, they are not in the free market system at all. 

 We should analyze their activities on the rest of the forest and 

 make comparables with regards to their fair market return on the 

 rest of the forest. And their activities have been virtually nil on the 

 rest of the forest as far as any kind of commercial activity. 



But you also mentioned in your testimony that the Park Service 

 currently has a multibillion dollar backlog of deferred maintenance. 

 Would you detail out how you would expect concessioners to deal 

 with that again? 



Mr. Duffus. I don't believe we are expecting the concessioners 

 to deal with the backlog. The backlog — and it is a pretty soft fig- 



